Marketing

Budget allocation strategies in PPC campaigns

Written by Louis - 22/05/2024

PPC campaigns are important tools designed for reaching the target audiences a business has. It’s a great way to drive traffic, generate conversions, and to spend your marketing budget efficiently. In order to properly maximise ROI, however, it is necessary to utilise budget allocation strategies.

Context-based budgeting

There are many different variables that should be considered whilst managing a PPC campaign, like the CTR (click-through rate), conversion rates, and CPC (cost per click). However, it may not be ideal to place all your budget into a campaign that is shown as being the best performing.

The reason is that if a business is getting, for example, many conversions for a less profitable service it may be worth focusing more of the PPC budget in a campaign that promotes a more profitable service. Although more could be paid for each lead, there will be a much higher ROI potential.

An example of this is if you are seeing a conversion at a cost of £10 that is selling a product worth £20 (200% ROI), it is more profitable than a conversion at a cost of £5 selling a product worth £7.50 (150% ROI) despite the higher cost per conversion.

As enticing as factors like CTR, CPC, and conversion rates are, it is recommended that you look further into the numbers before deciding how much of your budget should go into any campaign.

In addition to this, if there is an underperforming campaign or ad-group it’s worth considering having their budgets re-evaluated. It is not always worth reallocating or flat out removing budget from it, and this is because it may need more attention to reach its full potential.

(Business based budgeting) Maximise clicks strategies

Another consideration is whether maximise clicks strategies or maximise conversions are being used. If a maximise clicks strategy is being used, it is worth looking at if there is a bid limit in place; If there is, it is beneficial to the PPC account as it controls how much you are willing to pay for each click, in turn giving the account owner more control over the PPC auctions they are entering.

Adjusting for seasonality

As peak seasons come and go for businesses, it is worth considering whether or not to allocate more or less of your budget to campaigns that are either expecting or going through a decline or increase in performance.

For instance, a ski clothing company will naturally perform and sell better throughout Winter in comparison to the summer season – therefore more budget should be allocated for this season than others to utilise the increased traffic and to capitalise on the higher demand.

Shared budget & portfolio strategy

If you are unsure of the direction you want your various campaigns to take, portfolio bid strategies are a potential option. As defined by Google, a portfolio bid strategy are AI powered, goal-driven strategies which help optimise bids across multiple campaigns. They are all managed in one place for any quick changes that need to be made for any campaigns which are using a single portfolio bid strategy.

Conclusion

Metrics previously mentioned like CTR, CPC, and conversion rates do provide valuable insights, however, it is also important to consider the profitability of certain campaigns over others if there is a higher ROI potential.

Due to bid strategies being on a daily budget it is necessary to divide your monthly budget by 30.4 (for the average month) to determine the daily limit.

Choosing between maximise clicks, maximise conversions, and other strategies depends solely on the campaign goals. In addition, seasonality plays an important role particularly with ecommerce sites, highlighting the need to reallocate budgets based on peak seasons. In order to get the most out of your PPC campaign by maximising the ROI, it is crucial to utilise effective budget allocation strategies. If you’re unsure of how to manage your PPC account, reach out to us today for a free consultation call to find out how we can help.